Irvine-based Inari Medical Inc. said revenue soared sevenfold to more than $51 million in 2019.
Now it aims to be a Wall Street star with an initial public offering.
The commercial-stage medical device company, whose products treat patients suffering from blood clots and other diseases affecting veins, filed a preliminary prospectus on Feb. 21 with the Securities and Exchange Commission.Â
It would be the first IPO for an Orange County healthcare company in more than a year.
Inari formed in 2011 and has connections to a who’s who of OC’s medical device industry, including guru investor Bill Link and Edwards Lifesciences Corp. (NYSE: EW), the most highly valued publicly traded company based here.
Inari has raised about $54 million in private placements, half from a Series C round in 2018. The device maker said the IPO proceeds—its filing lists a $100 million placeholder amount—will fund commercialization and research.
Inari, heading for Nasdaq under the ticker “NARI,” declined last week to a Business Journal request for comment, citing quiet period restrictions.
Clearing Clots
The company makes its products at a 38,200-square-foot Spectrum-area facility and says it’s a pioneer in treating blood clots in veins.
Other devices on the market were developed for arterial clots, repurposed for venous uses and aren’t as effective, it said in regulatory filings.
Inari’s two devices, the FlowTriever and ClotTriever systems, generate all its revenue. The products—both cleared in the U.S. and with European CE Mark approval—are novel, minimally invasive, mechanical catheter-like devices.
ClotTriever could treat 242,000 patients annually diagnosed with deep-vein thrombosis, a $1.6 billion market. Another 200,000 patients with pulmonary embolisms could benefit from FlowTriever, a $2 billion market, filings said.
The latter product is the first thrombectomy system to be FDA-cleared for treatment of pulmonary embolism, which occurs when a blood clot gets lodged in an artery in the lung.
More than 4,500 procedures were performed last year using Inari’s products.
Emerging Growth
Its S-1 filing revealed a company that looks to be on the verge of high profits.
Inari lost $1.1 million in 2019 compared with $10.1 million in 2018. Operating profit was $801,000 before some expenses including interest and a change in the fair value of warrant liabilities.
Gross margin jumped to 88% in 2019, up from 81% the prior year.
Sales and administrative expenses rose almost fourfold to $37.2 million while research costs doubled to $7.2 million. It held 17 U.S. patents expected to expire between 2032 and 2037 and has 14 more pending.
Inari had $23.6 million in cash, $19.5 million in long-term debt, and its accumulated deficit was $41.2 million as of Dec. 31.
The company said it qualifies as an “emerging growth company” under the 2012 Jumpstart Our Business Startups Act of 2012, which enables it to more easily go public by reducing paperwork.
Inari’s IPO underwriters include Morgan Stanley, BofA Securities, Wells Fargo Securities, and Canaccord Genuity. Its legal representatives are the Latham & Watkins office in Costa Mesa.
Deep Background
Company executives and its nine-member board have extensive medical device industry resumes.
William Hoffman, 52, chief executive since 2015, previously was CEO of MRI-guided laser neurosurgery device maker Visualase Inc., bought by Medtronic’s neurovascular business in 2014 for $105 million. He holds 4.1% of Inari’s shares.
Co-founders Bob Rosenbluth, Paul Lubock and Brian Cox, each hold more than 50 patents. They’ve worked at device firms such as Microvention, Sequent Medical Inc. and Okami Medical Inc. Rosenbluth and Lubock are now on the board; Cox resigned last year.
Inari could be another home run for Bill Link, co-founder with Donald Milder of Versant Venture Management LLC, which owns 14.9% of Inari’s shares before the offering.
Link is Orange County’s best-known healthcare venture capital executive.
Milder, Inari board chair, controls a separate trust that counts an additional 13% stake in Inari.
Other big holders are Menlo Park-based U.S. Venture Partners and Netherlands-based Coöperatieve Gilde Healthcare IV U.A., each with about 20% stakes in the company.
In November, Inari added Cynthia Lucchese and Catherine Szyman to its board.
Szyman is corporate vice president of Critical Care at Irvine-based Edwards and spent 24 years at Medtronic, including as president of its diabetes unit.
Lucchese, chief financial officer at Hulman & Co., which owns the Indianapolis Motor Speedway and is being acquired by Penske Corp., is on the boards of medical device companies Intersect Ent Inc. (Nasdaq: XENT) and Hanger Inc. (NYSE: HNGR).
